For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine TPG Telecom Limited’s (ASX:TPM) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for TPG Telecom
Was TPM weak performance lately part of a long-term decline?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze many different companies on a similar basis, using new information. For TPG Telecom, its most recent trailing-twelve-month earnings is AU$388.50M, which, relative to the prior year’s level, has fallen by -3.14%. Given that these values may be somewhat short-term thinking, I’ve determined an annualized five-year figure for TPM’s earnings, which stands at AU$226.90M This means while earnings declined from the prior year, over time, TPG Telecom’s profits have been rising on average.
What’s the driver of this growth? Let’s take a look at whether it is merely because of industry tailwinds, or if TPG Telecom has experienced some company-specific growth. The climb in earnings seems to be supported by a robust top-line increase overtaking its growth rate of expenses. Though this resulted in a margin contraction, it has made TPG Telecom more profitable. Eyeballing growth from a sector-level, the Australian telecom industry has been growing, albeit, at a muted single-digit rate of 5.64% in the previous twelve months, and a substantial 14.78% over the past five years. This means whatever tailwind the industry is profiting from, TPG Telecom has not been able to leverage it as much as its average peer.
What does this mean?
TPG Telecom’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. You should continue to research TPG Telecom to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for TPM’s future growth? Take a look at our free research report of analyst consensus for TPM’s outlook.
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Financial Health: Is TPM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 January 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.